Karachi Stock Market Plunges Amid India’s Strong Diplomatic Action Following Pahalgam Attack

The Karachi Stock Exchange (KSE-100) witnessed a sharp sell-off on Thursday morning, tumbling by as much as 2,565 points, or 2.2 per cent, after India announced a series of unprecedented diplomatic measures against Pakistan in response to the Pahalgam terror attack that claimed at least 26 lives earlier this week.

The KSE-100 index, which had opened with deep losses, later pared some of the decline and was trading at 116,228.25, down 997.89 points or 0.85 per cent from Wednesday’s close of 117,226 as of 12:20 pm IST. Over the past year, the index has fluctuated between a 52-week low of 70,562.12 and a high of 120,796.67.

Pakistan Stock Exchange Website Down

The official website of the Pakistan Stock Exchange reportedly went offline shortly after India’s retaliation to the recent Pahalgam terror attacks. Visitors to the site were greeted with the message, “We’ll be back soon. PSX website is under maintenance until further notice,” according to The Times of India report.

India’s Action After Pahalgam Attack

The sharp fall came after India's Ministry of External Affairs (MEA) late Wednesday night announced five significant punitive actions aimed at Islamabad, including the suspension of the Indus Waters Treaty of 1960, a historic agreement critical to Pakistan’s agricultural and municipal water supply. This move marks the first time the treaty has been put on hold since its inception.

India's decision, which places the treaty “in abeyance,” is aimed at pressuring Pakistan to take credible action against cross-border terrorism. The Cabinet Committee on Security (CCS) also ordered the closure of the Attari border for all movement, advising Indian nationals in Pakistan to return by May 1.

In further escalation, the Indian government cancelled all SAARC Visa Exemption Scheme (SVES) visas issued to Pakistani citizens, instructing them to exit the country within 48 hours. Additionally, Pakistani defence attaches across the army, navy, and air force divisions have been declared persona non grata, signaling a severe breakdown in bilateral ties.

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Economic Pressure Builds On Pakistan

The market downturn comes at a time when Pakistan’s economy is already grappling with significant challenges. The International Monetary Fund (IMF) earlier this week revised its GDP growth forecast for Pakistan to 2.6 per cent for FY2024–25, down from 3 per cent. Similarly, the Asian Development Bank (ADB) also lowered its projection to 2.5 per cent, both falling short of the government’s 3.6 per cent target.

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